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CHIEF EXECUTIVE OFFICER’S REVIEWWe enrich ourphosphate rockwith the additionof sulphur.The cause of the fire was attributed to friction andhigh dust content from the sulphur received fromthe Middle East. The structures were subsequentlyrepaired and put to use.Post the financial year closure, on 7 May 2006, atransformer at the old phosphoric acid plant caughtfire, causing substantial damage to electrical cables;and Business Interruption is estimated to be as muchas 50 days.It is clear that safety and environmental complianceand responsibility should remain the key focus areafor the Richards Bay operation for the year tocome.MINE CLOSURE COST PROVISIONThe Group is aware of the increasing emphasison environmental accounting and accountability.Management is continually assessing and monitoringthe various environmental issues facing the Group.Based on a Mine Rehabilitation and Closure CostAssessment done by African EPA during 2005,the contingent liability has been recognised for theissuing of guarantees to the Department of Mineralsand Energy in terms of Regulation 54(2) of theRegulations promulgated in terms of the Mineralsand Petroleum Resources Department Act, 2003(Act 28 of 2004). The recommended mine closurecost at this stage (ignoring salvage value) is R223m.A commitment has been made to the Department ofEnvironmental Affairs with respect to the phased indelivery of guarantees. The value of the Trust as at31 March 2006 amounts to R41.2m.PROCUREMENT AND LOGISTICSDuring the first quarter of the year the internationalsulphur market was high but during the latter period,sulphur prices softened, which had a positive impacton the final product costing. Due to high productionthe volume of usage in the Richards Bay divisionwas higher by 9% than for the previous 12 monthperiod.high production of phosphoric acid at the RichardsBay plant.Once again, the focus of procurement has beenon promotion of Black Economic Empowerment(BBBEE). During the year under review, directpurchases from BBBEE suppliers have reached40% of discretionary procurement for the wholeGroup (excluding reagents and strategic rawmaterials on total purchases). The total spend wasR677m and the BBBEE spend came to R270m. Thisachievement is attributable to clear dedication ofFoskor management to ensuring black participationin the main supply chain of Foskor.OUR HUMAN CAPITALEMPLOYMENT EQUITYIn line with the Employment Equity Act the FoskorGroup has adopted a formal Employment EquityPolicy. The policy recognises the importance ofchanging the company’s demographic profile,in line with the demographics of the areas inwhich it operates, to create a diverse and skilledemployee workforce. Employment Equity targetsset by Employment Equity and Skills DevelopmentCommittees consisting of Management, OrganisedLabour, Women and Disabled Employeesrepresentatives are approved by the Boardof Directors. These targets form part of theperformance management targets of top and seniormanagement. Although the planned employmentequity targets, for the Group as a whole, for theyear under review, were substantially met, it isproving a major challenge to attract HistoricallyDisadvantaged South Africans (HDSAs) toPhalaborwa and to retain them. The shortage ofartisans in the country is also having an impacton the Group’s ability to attract and retain skilledartisans and this is one area where the achievementof the set targets is proving extremely challenging.This was somewhat alleviated by the developmentof in-house talent in line with the Section 28 artisantraining programme.During the period under review ammonia marketswere stable and quite high. Procurement of ammoniawas carried out on annual contract from Sabic andat the time when rates were on a downward trend.During the period under review, 40 000 tons ofammonia were purchased, which is more or less thesame as that of the previous 12 month period.Total shipments of Rock to Richards Bay were 10%higher than for the previous financial year due toSKILLS DEVELOPMENTThe Workplace Skills Plan and annual trainingreports for the operations in Phalaborwa andthe plant in Richards Bay are set, monitored andapproved by the two Employment Equity and SkillsDevelopment Committees respectively and thensubmitted to the relevant Sector Education andTraining Authority (SETA) – which in this caseis the Mining Qualifications Authority (MQA) orthe Chemical Industries Education and Training8
Authority (CHIETA) and the Department ofLabour. Foskor has received refund grants inexcess of 60% of the skills levies paid.employees is currently under investigation. Thepost-retirement health care and pension benefitsare also under review.safety and environmental compliance in RichardsBay will also assist in making the next year one tobe excited about.The Adult Basic Education and Training (ABET)programme is substantially complete in RichardsBay, with the Phalaborwa operation makingsubstantial progress in the period under review.The transfer of skills forms part of the BAA withCFL. Two batches of employees from RichardsBay were sent to India for training at CFL’soperations. A number of specialists were alsobrought from India to train Foskor employeesidentified for succession planning.INDUSTRIAL RELATIONSLabour relations throughout the Group continuedto flourish, without any industrial action takingplace during the period under review.HIV/AIDSThe challenges associated with the impact of HIV/AIDS on Foskor are being addressed. Althoughdifficult to quantify, due to the confidentialityassociated with the disease, the effects includeabsenteeism, reduced productivity, employeesbeing unable to perform their normal duties, lossof personnel and increased direct and indirectcosts. Foskor’s dual strategy approach includespreventative programmes such as education andawareness as well as support programmes, whichinclude the provision of anti-retroviral treatmentand nutritional supplements. A learnershipprogramme has also been started with theintention of having skills ready for replacement ofemployees lost to the pandemic.EMPLOYEE BENEFITSIt remains the objective of the Group to provideaffordable, effective and sustainable healthcare to all employees and their dependents inan equitable manner. It is for this reason thata revised health care policy, with a change inmedical aid service provider for the lower incomegroups, was approved by the Foskor Board andimplemented during the year under review. Allemployees are entitled to belong to a medical aidscheme of their choice from among those utilisedby the company.The Group operates a variety of Pension,Provident and Retirement funds together withDeath and Disability Insurance benefits. A processto integrate the various funds and benefits for allREMUNERATIONThe Group has a Board Human ResourcesCommittee, consisting of the CEO and nonexecutivedirectors, which is chaired by a nonexecutivedirector. Its specific terms of referenceinclude consideration and recommendation tothe Board on matters relating to general staffpolicy, remuneration, profit bonuses, executiveremuneration, directors’ remuneration and fees,service contracts and Group retirement and healthcare benefits.The Board Human Resources Committee wasalso, during the period under review, activelyinvolved in addressing the post retirement pensionand medical aid liabilities.The Company also has a Group RemunerationCommittee that, amongst other things, addressesequity in terms of salary and wages across theGroup.DIRECTORS’ REMUNERATIONThe Board Human Resources Committee considersthe remuneration of all directors and executives.The financial statements accompanying this reportreflect the directors’ earnings and other benefits.OUTLOOK FOR 2006/2007The main challenges for the Group will remain theconversion of our efforts in the arena of safety andenvironmental responsibility into results. Anotherfocus area will be the achievement of operationaltargets and specifically the containment ofproduction costs. A slight shift in focus will alsobe towards the mining operation, specifically theconversion of mineral rights and the PyroxeniteExpansion and Ore Replacement Project.The Group will continue to be faced with challengesin the market with the pricing of phosphoricacid into India and the phosphate rock into thedomestic market. Further challenges are alsoexpected with the supply of raw materials, morespecifically sulphur. Economic stability in SouthAfrica and a more consistent exchange rate arepredicted, which will certainly assist the businessmodel.The continued support from our partner, CFL, interms of increased production, improvement ofThe proposed acquisition of the Phalaborwa Worksof Sasol Nitro (‘FEDMIS”) was opposed by theCompetitions Commission and was scheduled tobe defended before the Competitions Tribunal on8 May 2006. This trial has been delayed, however,due to alternatives that are being investigated withSasol and third parties.ACKNOWLEDGEMENTOn behalf of executive management, I wishto express sincere thanks and appreciation toFoskor’s shareholders, our Board of Directors,our employees and our contractors – for theircommitment and support during a year that wasfull of challenges.I am convinced that Foskor now has the team,plant and strategy in place to deliver on our visionof maximising shareholder value in a safe andresponsible manner according to sound corporategovernance principles. With the support of thecapable and motivated team we now have in placeI am looking forward to taking on the challengesof the year ahead.IN APPRECIATIONMy sincere appreciation to Mr LL van Niekerk,outgoing Chairman of the board of directors of theGroup for the significant role he played in turningthis orginisation around.9
Page 2 and 3: MISSION• We accept our responsibi
Page 4 and 5: DIRECTORS AND MANAGEMENTList of Dir
Page 6 and 7: CHAIRMAN’S REVIEWOur focus is ong
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Page 18 and 19: AUDITORS’ REPORTIndependent audit
Page 20 and 21: REPORT OF THE DIRECTORStechnical, o
Page 22 and 23: BALANCE SHEETas at 31 March 2006COM
Page 24 and 25: STATEMENT OF CHANGES IN EQUITYfor t
Page 26 and 27: PRINCIPAL ACCOUNTING POLICIESThe pr
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ADMINISTRATIONSECRETARY AND REGISTE
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